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Industry watchers upbeat on tech sector's outlook

The near-term outlook for the nation's tech sector remains upbeat, supported by increasing spending on technology products among companies next year, industry watchers said yesterday.

The high-tech industry has seen consumers as the industry's backbone, while cautious enterprises have been holding back spending despite improvements in margins, Peter Sutton, head of research with CLSA Ltd's Taipei branch, said at a luncheon held yesterday by the European Chamber of Commerce Taipei.

"This could be a good sign ?[indicating] a huge potential for growth next year and decline in tech investment is unlikely," Sutton said.

He predicted a rather conservative single-digit growth rate between 5 percent and 9 percent for next year.

WAFERS

The research house projected overall wafer capacity to grow by 10 percent next year while demand could increase by 8.4 percent at the same time, indicating a very mild oversupply.

The prices of dynamic random access memory (DRAM) chips are expected to decline by 15 percent quarter-on-quarter for the next three, due to the weaker personal computer sector, according to CLSA.

COMPUTERS

Shipments of global desktop com-puters next year is estimated to reach 149.4 million units with a growth rate of 8 percent and 158.6 million units with a growth rate of 6 percent in 2006, down from 10 percent this year, CLSA said.

The growth of portable computer shipments would also slow down from 16 percent this year to 15 percent, with 51.06 million units next year and 14 percent with 58.21 percent in 2006, according to the securities house.

Since the PC sector has seen extra growth, further growth opportunities for this country are in the handset and consumer electronics sectors, which have more decent margins from a long-tern perspective, Sutton said.

CHINA FACTOR

While Taiwan is being encouraged to transform, another market watcher said the nation still leads the dance in the face of China, a new follower chasing behind in the high-tech arena.

China enjoyed a large number of engineering graduates every year but is dearth of management talent, said Mike Clendenin, Taiwan and China bureau chief of Electronic Engineering Times.

Although most of the products manufactured in China are low end and low margin, it has showed the signs of complexity and progress in access to capital and technology, Clendenin said.

He urged Taiwan to take China as an opportunity rather than a threat. He said that there are no alternatives for Taiwan but to seek cooperation for sustainable development.
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